NEW YORK -(Dow Jones)- New safety concerns for Pfizer Inc.’s (PFE) smoking- cessation drug could hurt the already stumbling sales acceleration of Chantix and lead to legal trouble for the New York pharmaceutical giant.
A report Wednesday from a watchdog group suggested Chantix may be linked to problems such as heart trouble, seizures and diabetes, adding to the already- known connection to psychiatric problems including suicide and depression. The news adds to the pile of misery in recent years resulting from research and development frustration, a relatively thin pipeline and looming generic competition for its top seller.
“It has been a litany of bad news for Pfizer,” said Les Funtleyder, an analyst with Miller Tabak. “This is worse news than we would have supposed, but we weren’t exactly positive on (Chantix) anyway.”
Pfizer has twice updated the Chantix label for potential side effects since its May 2006 approval. The Food and Drug Administration said in February that it is “increasingly likely” Chantix may be tied to serious psychiatric symptoms.
In late 2006, Pfizer halted development of its highly anticipated cholesterol drug, torcetrapib, and a year later stopped marketing its inhaled insulin product Exubera because of poor demand. Furthermore, its biggest seller, cholesterol drug Lipitor, which brought in more than a quarter of its $11.85 billion in first-quarter revenue, could see generic competition as early as 2010.
All of which has resulted in a stock price that is at 11-year lows and has lost more than a quarter of its value over the past year. Shares recently traded at a 52-week low of $19.65, down 1.7%. Supporting Pfizer’s stock price is the company’s lofty 6.5% dividend yield.
Though Chantix added just $277 million to Pfizer’s first-quarter revenue, Wall Street analysts note that the drug was one of the bright spots for the troubled company.
The recent news is likely to hurt the already slipping sales growth of the drug, especially if the safety concerns grab the attention of the mainstream media, rather than draw more attention from regulators.
“We don’t see an imminent regulatory risk for Chantix from this news, given that the data used in the report above has already been reviewed by the FDA,” UBS analyst Roopesh Patel said in a research report.
But sales of Chantix, typically taken for 12 weeks, are suffering. New prescriptions in April are down 23% to 392,233 from a year ago, according to Verispan, a drug-data research firm. Since January, new prescriptions are down 32%.
Indeed, Sanford Bernstein cut its sales estimates on Chantix by more than 20% this year, 42% next year and at least 50% thereafter to bring them in line with current prescription trends. It now sees 2009 sales of Chantix of $758 million, below 2007 sales of $883 million.
Legal Issues
Aside from the sales impact, the Chantix news could cause another headache for Pfizer: lawsuits.
“These kinds of announcements tend to draw lawyer attention,” Funtleyder said. “Some sort of lawsuit is almost inevitable. Whether or not there is any merit is another question.”
Pfizer declined to comment on any possible legal issues surrounding Chantix or any possible sales declines.
The motivation for patients to file liability suits is clear following some huge payouts in recent years. For example, Merck & Co. (MRK) is trying to finalize a $4.85 billion settlement of thousands of suits filed over its painkiller Vioxx, pulled from the market in 2004 because of elevated risk of cardiovascular events.
“It’s clear that Chantix is dangerous,” said Kristian Rasmussen, a partner with the law firm Cory Watson Crowder & DeGaris in Birmingham, Ala.
Notably, Rasmussen said his firm has received 1,300 inquiries from concerned Chantix users since the release of the report late Wednesday.
But Funtleyder is quick to point out that the Chantix situation is much different than that of Vioxx, and sales are much lower than those of Vioxx, which had $2.5 billion in its last full year.
He doesn’t believe the litigation issues will become material, but that the potential legal situation is dynamic and “impossible to handicap.”
-By Thomas Gryta, Dow Jones Newswires; 201-938-2053; thomas.gryta@dowjones.com
(END) Dow Jones Newswires 05-22-08 1332ET Copyright (c) 2008 Dow Jones & Company, Inc.
